Regulations and requirements for debt review in South Africa

Those who are truly having trouble making ends meet may benefit from participating in a professional debt rehabilitation programme like debt review.

If you undergo debt review, it’s because a debt counsellor has determined that you have too much debt and could benefit from a more formalised repayment plan.

The debt counsellor will have direct conversations with your credit card companies and other lenders in an effort to lower your interest rates and improve your repayment arrangements.

Following the completion and acceptance of your payment plan, you will be able to begin making regular payments towards the settlement of your debt.

1.    Missing payments under debt review

Once your repayment plan has been arranged and completed, you will not be able to skip any instalments. When a payment is missed, the entire payment schedule is null and void.

You can avoid jeopardising your debt review agreement by making even the smallest of monthly payments as outlined in your repayment plan.

2.    Applying for credit under debt review

You will not be eligible to apply for any banking products or services that involve borrowing money from the bank or any other licenced credit providers.

To give just one example, you won’t be able to apply for a new credit card if you’re already in debt review, and using your existing credit cards while still making payments on your outstanding debts will increase the likelihood that your debt review programme will be terminated.

During the debt review process, you are not permitted to apply for a loan from a bank or other approved credit providers.

To the extent possible, settling all outstanding obligations should be the goal of any debt review process. Therefore, it is strongly advised against taking on any new debt while still paying off old obligations.

3.    Setting up a business under debt review

You should prioritise being debt-free during the debt review process. You can legally form a company, but you won’t have access to bank loans for businesses or loans from legitimate lenders.

Beginning a company while still saddled with personal debt might lead to inability to pay bills and eventually bankruptcy.

While under debt review, you shouldn’t take on any new debt and should instead focus on paying off your existing obligations as soon as possible so that you can move on to other initiatives.

4.    Working with creditors under debt review

If you are suffering a temporary cash flow issue and can come to an arrangement in writing with your credit providers to begin paying off your debts, you can engage with them directly to resolve the issue.

If you owe money to more than one creditor, though, it’s a good idea to get some professional assistance in arranging a repayment plan for your debts through a debt review.

Avoiding legal trouble is another benefit of debt review; while you are through debt review, no legal action can be taken against you for 60 days, and creditors are prohibited from threatening legal action as long as you are in compliance with your repayment plan.

Also read: Here are three tips to help you save like a pro